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Get in while the getting is good.
By Tom Long | February 26, 2008
In our FX Power Courses, we always ask new traders to tell us about any potential trades they see setting up in the market. An example would be when a currency pair, being in a strong uptrend, pulls back down to a good support level, offering a solid buying opportunity. But too often when this happens, new traders will say that they want “to see what happens next” instead of jumping into the trade. Naturally, we ask new traders to place these trades in a demo account, so this hesitation is not about risk. This is about new traders who have little confidence in their trading approach. But practicing is about identifying a good trading opportunity and aggressively getting into that trade when the setup is complete. Don’t worry about how the trade will play out, as we are practicing how to trade, not how to be a spectator. As the market pulls back to a support level, it is offering us a good place to buy and to keep our risk reasonable. Since we would be placing our initial protective stop below that support level, the closer we buy to support, the closer our stop is to our entry price which means less risk. So we want to buy as the market is testing that level instead of hesitating. If the market rallies off of that support as you suspected and then you decide to get into the trade, your risk will be larger. So practice identifying a trading opportunity and then get into that trade as it sets up. Waiting to see what happens next is much more educational when you have a trade open, even a practice trade. So don’t hesitate getting in when the getting is good.
noneTopics: Don't Trade Like This |
June 5th, 2008 at 3:51 pm
thanks for the tips, still a lot of things to learn…